4 ms·

As mentioned in the article, pharma is high-risk high-reward long term investment. Many companies tried and failed to produce an effective COVID vaccine (CureVa

by axg11 5y ago

As mentioned in the article, pharma is high-risk high-reward long term investment. Many companies tried and failed to produce an effective COVID vaccine (CureVac, Merck). Those companies invested R&D dollars well before the pandemic and further invested in recent trials. When a pharma company finds a winner, of course the margin will be great, the raw materials for most medicines are cheap relative to the value they bring. But the margin doesn't account for the 10+ years of R&D spend that put Moderna into the position it is in today.

ackbar03 5y ago
Is there any good/better way to derisk this process? It's always seemed quite inefficient to me
- giarc 5y ago
  Read up on Andrew Lo. He used his background in finance to develop better biotech financing models. https://www.bloomberg.com/news/articles/2021-02-05/out-of-grief-mit-s-andrew-lo-invented-a-better-way-to-finance-biomedical-innovation https://www.bloomberg.com/news/articles/2021-02-05/out-of-gr...
- cshimmin 5y ago
  It seems that at some level, that is exactly the purpose of (publicly-funded) basic research on the academic side. For example, the idea of messenger RNA therapy has been around for decades in the academic literature, and of course this idea was only possible with preceding advancements in general biology.
- osigurdson 5y ago
  https://www.schrodinger.com/ https://www.schrodinger.com/
  - theonething 5y ago
    totally off topic, but can't resist. on their careers page, under Software Engineers there is this listing: > Developer, Force Fields haha, yes, the scifi nerd dream job. :)
    - Ajef 5y ago
      I assume it's referring to this: https://en.wikipedia.org/wiki/Force_field_(chemistry) https://en.wikipedia.org/wiki/Force_field_(chemistry) And developing software similar to: https://openforcefield.org/software/ https://openforcefield.org/software/
- csours 5y ago
  Protein folding helps some. Genomics help some. Computer models help with pharmacokinetics. But all these things help you get to the expensive part more easily: testing safety and efficacy. https://www.science.org/content/blog-post/big-problems https://www.science.org/content/blog-post/big-problems https://www.science.org/content/blog-post/ai-and-drug-discovery-attacking-right-problems https://www.science.org/content/blog-post/ai-and-drug-discov... https://www.science.org/content/blog-post/another-ai-generated-drug https://www.science.org/content/blog-post/another-ai-generat...
  - ethbr0 5y ago
    Or to put it in other terms, "better" ways mean billions of dollars of avoided loss / additional profit to pharma companies doing drug development. Suffice to say, there are a lot of people always looking at this, and a lot of money being spent on it. It's just hard.
- cehrlich 5y ago
  Currently, no. Bringing a new drug to market takes several years and a billion dollars. And I haven't seen any compelling evidence that anyone is working on a "solution". A large part of the cost and complexity is the clinical trials, of which several stages of increasing complexity are required to get FDA approval. While it might seem inefficient, it's also the reason why vaccines work so well and have such small side effects - about half of Phase 3 candidates either fail the clinical trial or are rejected by the government for some other reason. Each round of clinical trials requires significantly more money than the one before it, but it's also arguably easier to get investors on board in the later rounds as risk is lower. Smaller pharma companies often aim to get bought outright before their product is brought to market because it makes more sense for everyone involved. Maybe someone will come up with an algorithm that lets us simulate clinical trials with sufficient precision, but that seems like a far-off sci fi fantasy to me.
ethbr0 5y ago
> But the margin doesn't account for the 10+ years of R&D spend that put Moderna into the position it is in today. This and the associated economics seem like the central problem with biotechnology funding. The timescales and likelihood of success preclude anything under the size of government investment. Even Gates can only nibble around the edges.
- refurb 5y ago
  Private investment in biotech dwarfs what the US puts in right now. US gov't (NIH) = $41.6B (not all is for biotech) Biggest pharma (PhRMA members) R&D = $83B VC biotech funding + follow-on rounds = $62B So private funding is ~3.5x what the gov't spends today.
  - dataking 5y ago
    The Gov't is often the earliest and most risk tolerant investor. I'm mainly thinking of DARPA (who funded Moderna to the tune of $25M if my memory serves) here, I have much less knowledge of how risk tolerant NIH is.
    - mrjangles 5y ago
      As the article points out, Modern was spending 500M a year on research before becoming profitable. Do you think a one time payment of 25M from DARPA was in any way relevant to their success?
      - 20after4 5y ago
        If it happened at the very beginning when they had exactly $0 then yes it would be highly relevant. (I am not at all familiar with how Moderna got started)

by axg11 5y ago

ackbar03 5y ago

Is there any good/better way to derisk this process? It's always seemed quite inefficient to me

giarc 5y ago
Read up on Andrew Lo. He used his background in finance to develop better biotech financing models. https://www.bloomberg.com/news/articles/2021-02-05/out-of-grief-mit-s-andrew-lo-invented-a-better-way-to-finance-biomedical-innovation https://www.bloomberg.com/news/articles/2021-02-05/out-of-gr...
cshimmin 5y ago
It seems that at some level, that is exactly the purpose of (publicly-funded) basic research on the academic side. For example, the idea of messenger RNA therapy has been around for decades in the academic literature, and of course this idea was only possible with preceding advancements in general biology.
osigurdson 5y ago
https://www.schrodinger.com/ https://www.schrodinger.com/
- theonething 5y ago
  totally off topic, but can't resist. on their careers page, under Software Engineers there is this listing: > Developer, Force Fields haha, yes, the scifi nerd dream job. :)
  - Ajef 5y ago
    I assume it's referring to this: https://en.wikipedia.org/wiki/Force_field_(chemistry) https://en.wikipedia.org/wiki/Force_field_(chemistry) And developing software similar to: https://openforcefield.org/software/ https://openforcefield.org/software/
csours 5y ago
Protein folding helps some. Genomics help some. Computer models help with pharmacokinetics. But all these things help you get to the expensive part more easily: testing safety and efficacy. https://www.science.org/content/blog-post/big-problems https://www.science.org/content/blog-post/big-problems https://www.science.org/content/blog-post/ai-and-drug-discovery-attacking-right-problems https://www.science.org/content/blog-post/ai-and-drug-discov... https://www.science.org/content/blog-post/another-ai-generated-drug https://www.science.org/content/blog-post/another-ai-generat...
- ethbr0 5y ago
  Or to put it in other terms, "better" ways mean billions of dollars of avoided loss / additional profit to pharma companies doing drug development. Suffice to say, there are a lot of people always looking at this, and a lot of money being spent on it. It's just hard.
cehrlich 5y ago
Currently, no. Bringing a new drug to market takes several years and a billion dollars. And I haven't seen any compelling evidence that anyone is working on a "solution". A large part of the cost and complexity is the clinical trials, of which several stages of increasing complexity are required to get FDA approval. While it might seem inefficient, it's also the reason why vaccines work so well and have such small side effects - about half of Phase 3 candidates either fail the clinical trial or are rejected by the government for some other reason. Each round of clinical trials requires significantly more money than the one before it, but it's also arguably easier to get investors on board in the later rounds as risk is lower. Smaller pharma companies often aim to get bought outright before their product is brought to market because it makes more sense for everyone involved. Maybe someone will come up with an algorithm that lets us simulate clinical trials with sufficient precision, but that seems like a far-off sci fi fantasy to me.

ethbr0 5y ago

> But the margin doesn't account for the 10+ years of R&D spend that put Moderna into the position it is in today. This and the associated economics seem like the central problem with biotechnology funding. The timescales and likelihood of success preclude anything under the size of government investment. Even Gates can only nibble around the edges.

refurb 5y ago
Private investment in biotech dwarfs what the US puts in right now. US gov't (NIH) = $41.6B (not all is for biotech) Biggest pharma (PhRMA members) R&D = $83B VC biotech funding + follow-on rounds = $62B So private funding is ~3.5x what the gov't spends today.
- dataking 5y ago
  The Gov't is often the earliest and most risk tolerant investor. I'm mainly thinking of DARPA (who funded Moderna to the tune of $25M if my memory serves) here, I have much less knowledge of how risk tolerant NIH is.
  - mrjangles 5y ago
    As the article points out, Modern was spending 500M a year on research before becoming profitable. Do you think a one time payment of 25M from DARPA was in any way relevant to their success?
    - 20after4 5y ago
      If it happened at the very beginning when they had exactly $0 then yes it would be highly relevant. (I am not at all familiar with how Moderna got started)